Liability For Mass Shootings: Coverage Issues

By: Patricia McHugh Lambert, Esq. Member, Pessin Katz, P.A.

What Constitutes Mass Shooting/Active Shooter Situation?

Currently, there is no universally accepted definition of “mass shooting,” the general understanding of the concept seems to be a combination of two sub-categories of violent events, “mass killings” and “active shooters.”

The Investigative Assistance for Violent Crimes Act of 2012 passed by Congress defines “mass killing” as “3 or more killings in a single incident” regardless of weapon.  This definition, however, does not account for those injured, but who ultimately survived the incident. In contrast, “active shooter” is defined by the FBI as an individual or individuals actively engaged in killing or trying to kill people in a populated area.

These varying definitions may affect average statistics, legal definitions related to mass shootings, as well as terminology used in future insurance coverage policies.

Statistics.

According to the Washington Post, 1,165 people were killed since 1966, focusing on 163 shootings in which four or more people were killed by a single shooter. The youngest victim was eight (8) months old and the oldest victim was ninety-eight (98) years old. Bonnie Berkowitz, Chris Alcantara, & Denise Lu, The Terrible Numbers That Grow With Each Mass Shooting, The Washington Post, https://www.washingtonpost.com/graphics/2018/national/mass-shootings-in-america/ (last visited Aug. 6, 2019). These numbers do not include the most recent shootings that have continued in places such as Ohio and Texas.

Based on statistics looking at a broader definition of Mass Shootings, Vox Media has determined that there have been at least 2,173 mass shootings since Sandy Hook, with at least 2,419 killed and 9,033 wounded. German Lopez & Kavya Sukumar, After Sandy Hook, we said never again. And then we let 2,178 mass shootings happen, Vox (last updated August 6, 2019, 6:30 AM), https://www.vox.com/a/mass-shootings-america-sandy-hook-gun-violence.

Furthermore, as reported in a 2016 study on mass shootings, which looked at 292 incidents in which four or more people were killed, the study found that 90 of the shootings occurred in the United States of America. These numbers are significant because while the United States has about five percent (5%) of the world’s population, it has ultimately had thirty-one percent (31%) of all public mass shootings and those numbers are continuing to grow.

AJ Willingham & Saeed Ahmed, Mass shootings in America are a serious problem — and these 9 charts show just why, CNN (Nov. 6, 2017), https://www.cnn.com/2016/06/13/health/mass-shootings-in-america-in-charts-and-graphs-trnd/index.html.

Other Forms of Work Place Violence.

In addition to mass shootings and active shooter situations there are other forms of work place violence that occur. Another term often thought to be synonymous with mass shootings is workplace violence.  More than two million Americans report being victims of violence in the workplace each year. The term encompasses all violence or threats of violence against workers. Patricia McHugh Lambert, Esq., Named Perils Coverage For Mass Shootings, PK Law, https://pklaw.com/articles/named-perils-coverage-for-mass-shootings/ (last visited Aug. 01, 2019). Although what is defined as work place violence does not typically rise to the level of mass shooting or active shooter situations, instances of work place violence can play a role when courts interpret whether or not a mass shooting or active shooter situation could be deemed as reasonably foreseeable.

What is the Likelihood That an Employer/Venue Will be Found Liable?

More than seventy-five percent (75%) of individuals who participated in mass violence exhibited signs beforehand. According to reports, statistics have shown that more than seventy-five percent of the perpetrators had, before the attack, made concerning statements or exhibited risky behavior.  Once a threat is identified, prevention or risk reduction protocols can be employed. If the venue does not have identification or prevention protocols in place, there is a greater possibility that the venue, business/employer, school board, etc. will be held liable for its failure to protect people from injuries that were deemed “reasonably foreseeable.” Monica Sullivan & Matthew Novaria, Insurance Considerations For Mass-Shooting Litigation, Law 360,  https://www.law360.com/articles/1036307/insurance-considerations-for-mass-shooting-litigation  (last visited Aug. 01, 2019).

Rise of Civil Suits as a Result of Mass Killings or Active Shooter Situations.

Since the Columbine High School shooting in 1999, victims have increasingly brought civil suits against managers, property, owners, companies, and even gun manufacturers. The courts have typically sided with the defendants except in cases where it can be shown that the threat was foreseeable. Civil litigation deriving from mass killings or active shooter situations can cause a large amount of reputational harm to civil defendants ranging from negative media attention to law enforcement engagement which can lead to a financial decline. As a result schools, companies, venues, and other institutions at risk for mass shootings are seeking out active assailant policies and other protections.Monica Sullivan & Matthew Novaria, Insurance Considerations For Mass-Shooting Litigation, Law 360,  https://www.law360.com/articles/1036307/insurance-considerations-for-mass-shooting-litigation  (last visited Aug. 01, 2019).

Recent Cases.

MGM Resorts International v. Zurich American Insurance Co.

The MGM v. Zurich case derives from events that took place on October 03, 2017 in Las Vegas, Nevada. On October 03, 2017 a shooter opened fire outside of the window of the Mandalay Bay Hotel on participants of the Route 91 Harvest festival, which resulted in the deaths and injuries of hundreds of people. As a result of the events that took place during that shooting, MGM now faces claims from close to 4,000 claimants who are seeking compensation. MGM has continued to dispute any liability arising out of the event, and they currently bring this suit claiming that the insurance company has failed to pay legal costs to enable MGM to present an adequate defense against these claims which is estimated to amount to millions of dollars.

On June 19, 2019, in U.S. District Court of Las Vegas there was a law suit filed by MGM Resorts against Zurich American Insurance Co. alleging breach of contract, for Zurich’s denial to pay any defense costs for damage claims stemming from the 2017 shooting. The 2017 Las Vegas shooting resulted in fifty-eight (58) dead and more than eight hundred and fifty (850) injured. MGM Resorts owns the Mandalay Bay hotel, where the shooter shot out of the window on the 32nd floor, which is why MGM has been the sole focus of many of the claims deriving from the October shooting. MGM Resorts Sues Zurich American Insurance for Las Vegas Shooting Defense Costs, Insurance Journal (June 24, 2019),  https://www.insurancejournal.com/news/national/2019/06/24/530288.htm.

The present case of MGM Resorts International v. Zurich American Insurance Co. is a prime example of what can take place as a result of a mass killing or active shooter situation when there is not adequate coverage. In addition, it exemplifies how mass shootings are generally not considered acts of terrorism which increases the possibility of parties being held liable for the acts of mass shooters. Depending on the results of this pending lawsuit MGM may be directly held financially liable for litigation costs and damages of over now 4,000 claimants without any insurance coverage.It is also important to note that previously on July 13, 2018 MGM technically filed law suits against the victims claiming that the company had “no liability of any kind” and that the lawsuits of around 2,500 people should be dismissed. The victims asserted claims attempting to hold MGM responsible for the “deaths, injuries, and emotional distress” from the attack. MGM argued that the Contemporary Services Corporation, who was certified by the Department of Homeland Security as being responsible “for protecting against and responding to acts of mass injury and destruction” should be held liable for the damages derived from that day. Furthermore, MGM argued that they were free from liability under the 2002 Support Anti-Terrorism by Fostering Effective Technologies (SAFETY) Act. However, in order to be covered from liability under this act the Department of Homeland Security would have to consider the shooter’s acts an act of Terrorism, which it did not. MGM’s lawsuit against Las Vegas shooting victims, explained, PBS NewsHour (Jul 18, 2018), https://www.pbs.org/newshour/nation/mgms-lawsuit-against-las-vegas-shooting-victims-explained. This ongoing litigation is what has led to MGM’s case against Zurich.

Why Do General Liability Insurance Policies Not Cover Mass Shootings?

Most general liability policies cover what they define as an occurrence. Many general liability policies do not interpret a mass shooting as an “occurrence”. Monica Sullivan & Matthew Novaria, Insurance Considerations For Mass-Shooting Litigation, LAW 360,  https://www.law360.com/articles/1036307/insurance-considerations-for-mass-shooting-litigation  (last visited Aug. 01, 2019). Courts analyzing this issue, analyzed this issue by ultimately deciding that if criminal conduct is involved regardless of whether or not the negligent conduct is inextricably intertwined with allegations of intentional conduct, then it is not an occurrence.

In addition, general liability policies typically only apply to bodily injury. Therefore individuals that were present during the shooting and suffered emotional distress, but not physically harm, may not be covered under general liability policies. Which means all claims of emotional stress, trauma, etc. would not be covered under general liability policies. See id.

What Do Peril Insurance Policies Cover?

In response to the increase in mass violence situations peril insurance policies are now being underwritten at an increasing rate and cover the following:

• Counseling and support resources.
• Medical, disability, funeral expenses and death benefits.
• Revenue loss/extra expenses caused by the shooting.
• Property damage and tear down expenses.
• Required post event security upgrades.
• Litigation expense.
• Liability coverage.

Patricia McHugh Lambert, Esq., Named Perils Coverage For Mass Shootings, PK Law, https://pklaw.com/articles/named-perils-coverage-for-mass-shootings/ (last visited Aug. 01, 2019).

What are the EXCLUSIONS to Peril Insurance Policies?

• Some policies exclude coverage for employees (presumably because there is worker’s compensation coverage elsewhere).
•  Many policies also expressly exclude coverage for injuries caused by vehicles.
• Other policies limit coverage to damage caused by firearms so that harm caused by explosive devices are not covered.
• These perils policies are also specific in terms of the triggers for coverage, such as limiting coverage to where four or more individuals are attacked.
• However, as the threats increase the named peril policy forms are beginning to evolve as for coverage, exclusions, conditions and limitations.

The Rise of Peril Insurance Policies/Active Assailant Insurance.

Some are now recognizing this peril policies being established by insurance companies as “active assailant insurance” policies. According to recent data by the Bureau of Labor Statistics, homicides accounted for 10% of workplace death that occurred in 2016. Of those 500 work place homicides, 394 of them or 80% were caused by shootings.

See Adjua Fisher, Is Active Shooter Insurance Becoming a Risk Management Necessity?, Risk & Insurance, https://riskandinsurance.com/active-shooter-insurance-for-workplaces/ (last visited Aug. 01, 2019); see also There were 500 workplace homicides in the United States in 2016, U.S. Dept. of Labor, https://www.bls.gov/opub/ted/2018/there-were-500-workplace-homicides-in-the-united-states-in-2016.htm (last visited Aug. 01, 2019).

What Do We Do As Insurance Professionals?

• Be aware of the current liability policies which may include some but not all coverage for mass shootings/active shooter situations, and also be aware of new policies that are likely to be underwritten.
• Understand that currently some liability policies do provide coverage for “crisis management” events which may include coverage for mass shooting related events such as public relations or media management costs and funding for emergency response.
• Be sure to watch and follow developments surrounding  the Terrorism Risk Insurance Act (TRIA) enacted in November 2002, some polices may provide coverage for terrorism related events which may possibly include a mass shooting depending on the circumstances. In addition, in order for Terrorism coverage to apply the U.S. Department of the Treasury may have to certify the event as an act of terrorism.
• It is also important to note that as of April 23, 2018 the Department of the Treasury has not certified any event labeled as a mass shooting in the U.S. as an act of terrorism.

Monica Sullivan & Matthew Novaria, Insurance Considerations For Mass-Shooting Litigation, Law 360,  https://www.law360.com/articles/1036307/insurance-considerations-for-mass-shooting-litigation  (last visited Aug. 01, 2019).

What Should We as Professionals Consider NEXT?

Professionals should start to consider the cost of what these new insurance policies may be for themselves and/or their clients. For example, the Wall Street Journal reports that school systems may have annual premiums for active shooter insurance which can possibly range from $1,800 to $20 million depending on the size of the schools.

Lastly, as active shooter policies and other similar insurance based products begin to be underwritten, it is important that all interested parties have an understanding of the differences between previously used commercial general liability policies and the newly established specialized insurance policies that will be offered. This understanding will allow professionals to have an in-depth understanding into what coverage they should look for in new policies and how the lack of certain coverage could potentially leave them vulnerable to financial liability in the future. See Adjua Fisher, Is Active Shooter Insurance Becoming a Risk Management Necessity?, Risk & Insurance, https://riskandinsurance.com/active-shooter-insurance-for-workplaces/ (last visited Aug. 01, 2019); see also Monica Sullivan & Matthew Novaria, Insurance Considerations For Mass-Shooting Litigation, Law 360,  https://www.law360.com/articles/1036307/insurance-considerations-for-mass-shooting-litigation  (last visited Aug. 01, 2019).

Ms. Lambert has over 35 years of experience in handling complex commercial litigation and insurance matters. Ms. Lambert has worked on national class actions, significant litigation and regulatory matters for Fortune 500 companies. She has also assisted small and mid-sized companies and business executives with contract, real estate and commercial disputes that needed to be resolved quickly and efficiently. Ms. Lambert is best known as an attorney who knows the field of insurance. She has represented insurers, policyholders, and insurance producers in disputes both in court and before the Maryland Insurance Administration.